Does capitalism need to change? It hardly seems a controversial proposition. The 2008 financial crisis has cast a long shadow. Growth in incomes has been slow for over a decade. Many of the jobs that have been created are also precarious—fixed-term or zero-hours—or unpleasant or badly paid, or all of these. Usage of food banks has rocketed and homelessness is increasing. The potentially catastrophic consequences of climate change seem likely to hit us sooner rather than later. The pandemic has widened the obscene inequalities in already divided societies. At the same time, the response to Covid-19 has vastly extended the scope of the state’s intervention in the economy. In the middle of a tough winter, the government enticingly vows to “build back better,” but it’s hard to believe things can go “back” at all.
Yet changing “the system” is difficult. What new form of capitalism should we be hoping for and how can western market economies hope to get there? Fixing challenges of such range and complexity requires co-operation between many people and organisations, all in the context of populist politics and fundamentally diverging views. After all, some countries (the US pre-eminently, but also to a concerning extent the UK) do not have the political consensus or the institutional capability to control a lethal pandemic. What are the chances of transforming business and daily life to deliver, for example, zero-carbon activity, better infrastructure, lower inequality, higher productivity, or the preservation of biodiversity?
As the prominent economist Mariana Mazzucato notes in her new book, Mission Economy, “fixing capitalism” is what is known as a “wicked” problem. This is a concept dating back to the crisis-ridden 1970s. In a 1973 article Horst Rittel and Melvin Webber defined “wicked” problems which defy technocratic solutions. It is worth quoting their formulation in full: “Policy problems cannot be definitively described. Moreover, in a pluralistic society there is nothing like the indisputable public good; there is no objective definition of equity; policies that respond to social problems cannot be meaningfully correct or false; and it makes no sense to talk about ‘optimal solutions’ to social problems […] Even worse, there are no ‘solutions’ in the sense of definitive and objective answers.”
Much the same can be said about the problems that seem perennially unresolved today, which may be why authors such as Thomas Piketty, Walter Scheidel and Peter Turchin have argued, from different perspectives, that only major crises or catastrophes bring about system resets. Conflict is what cuts through the tangle. Perhaps, in early 2021, the world will turn out to be at just such a point. But given that previous resets included world wars and revolutions, this should not be viewed with total equanimity. Are there less turbulent alternatives?
Mazzucato reckons so. She draws inspiration from President Kennedy’s literal moonshot: his 1961 challenge to land an American on the moon before the decade ended. In today’s circumstances, she argues, policies need to be oriented to challenges as substantial in their way as the moonshot.
Her book draws on an argument she first set out in 2013’s The Entrepreneurial State that the state plays a critical role in the development of the technologies that have transformed our lives. Her poster child is DARPA, the US Defense Advanced Research Projects Agency, which funded research leading to the internet and GPS, among other innovations. We would not, she argues, have the iconic private sector innovations of modern life without active government investment.
Mazzucato’s new book criticises the narrowness of the philosophy that says the only role for government is to correct “market failures,” stepping in when the private sector cannot deliver adequately by itself. This animating idea of the Thatcher and Reagan years has cast a long shadow over subsequent generations of officials as well as politicians of the right and centre. In the US (and to a lesser degree the UK) it is still firmly the view of “free marketeers” of the right.
The power of this once-dominant philosophy is already ebbing, however. Contrary to popular impressions, economic research and even undergraduate teaching have been moving away from the simplistic “market good, government bad” thinking for years now. Many public agencies—the BBC, arts organisations, even many police forces—have been guided by the more active concept of creating “public value” since the mid-2000s, as Mazzucato approvingly notes.
More recently, the Conservative government of Theresa May introduced an Industrial Strategy in 2017, a quarter of a century after another Conservative prime minister, John Major, abolished the National Economic Development Office, which had been responsible for industrial policy since the 1960s. The swathe of official strategy documents could not be clearer about the need for active government in, for example, shaping markets for new technologies. The Johnson government has added the twists of a focus on green technology and “levelling up” between regions. Indeed, Mazzucato herself has advised the Department for Business, Energy and Industrial Strategy and other bodies, including the European Commission, on industrial strategy. In advocating active government—through funding research, investing in infrastructure, setting technical standards, shaping markets through procurement or regulation—she is pushing at an open door.
Mission Economy’s proposition is that the state’s energies need to be corralled, JFK-style, into specified missions. It sets out many examples of the kind of “mission maps” Mazzucato uses to advise governments and public bodies. The mission then needs translating into a technical target (or targets), whose achievement by a given date can be monitored. For example, “citizen health and wellbeing” is the overall mission, and the target might be “halving the human burden of dementia by 2030.” Beneath them lies a diagram of the sectors involved in delivering the mission (medical, technological, pharmaceutical, design, “behavioural,” etc) and their contributions to outcomes such as “new personalised treatments for neurogenerative diseases.”
A mission could involve many different challenges: in the case of, say, “citizen health and wellbeing,” these could range from air quality to teenage mental health to loneliness to, yes, dementia. The book delineates several other examples of broad missions: clean oceans, digital transformation and addressing climate change.
As Mazzucato points out, there is an important difference between missions aiming to solve “wicked” problems and more focused intermediate challenges. Yet this undercuts her use of the moonshot example as the archetype for big missions. For the moonshot was not JFK’s mission at all—but rather an intermediate “target”; the wider “mission” was “beat the Russians.” Similarly, it was never DARPA’s mission to invent the internet, or to trigger the digital revolution. Its stated ambition was and is “to make pivotal investments in breakthrough technologies for national security,” or in other words to ensure the US has a technological edge on its opponents. The internet was an accidental byproduct of the Cold War, not part of US government economic policy.
The book, then, proposes a technocratic framework to solve fundamentally political issues. It is easy to see why officials like the clarity and sense of purpose that a mission gives to their responsibilities for improving society. (Remember Boris Johnson called his Covid-19 testing plan a “moonshot.”) But there are many choices to be made regarding both missions and intermediate challenges, which plunge us deep into the political domain.
Just think about the polarisation of views about climate change, or even Covid-19 vaccines. National security—as with the moonshot—may be the only genuinely unifying mission (although as Charles Fishman’s excellent book One Giant Leap makes clear, the project to put a man on the moon itself remained contentious for years). “Citizen wellbeing” is hard to argue with, but that may just push the disagreements down a level: why target the dementia burden rather than, say, redressing some of the multiple challenges from insecure work to inadequate housing facing the young? In any case, politicians need to select the grand missions, make them a priority for budgets and legislation, and win over enough hearts and minds. These are inherently political jobs. Both Harold Wilson’s 1963 “white heat of technology” speech or Tony Blair’s much-mocked Cool Britannia are examples of missions—both of which did help align a range of policies.
However, in today’s context, Mission Economy underplays two key issues. One is implementation. “Government failure” is not a myth. The book criticises the assumption that public officials and politicians have their own interests in addition to serving the public. The reductive doctrine of so-called New Public Management (NPM) has certainly been damaging. Its obsession with targets (necessary to police the “producer interest”) has induced perverse behaviour in the public sector—for example, creating incentives to hit waiting time targets instead of best patient outcomes, or edging pupils over arbitrary exam grade boundaries, rather than preparing them for the modern labour market. NPM has also combined with austerity politics through a rhetoric of “efficiency” that has led to profound under-investment in health, education and other public services that are so vital to a productive economy.
Mission-driven policies are useful, but the details of implementation cannot be overlooked.
Yet any advocate of governments playing a strategic role in the economy—and I am among them—must address the problems in public provision that made Thatcherism and NPM politically feasible in the first place. By the late 1970s, the UK government’s involvement in economic production was problematic. Its industrial policy did “pick winners” on dubious criteria, and subsidised losers on a scale far beyond the losses any private investor would have tolerated—not just large incumbents such as British Leyland but also high-tech start-ups like DeLorean cars. Without the discipline of the market, political processes and officials’ priorities have been proven to be an inadequate means of achieving efficient and sustainable production.
To claim, as Mazzucato does, that there is no difference between public and private sector with regard to the likelihood that some investment bets will fail is to ignore this reality. Even the most recent incarnation of industrial strategy has proven vulnerable to lobbying by business, with “sector deals” promoting specific industries over others. A new framework for government intervention, including a National Investment Bank, needs to pay careful attention to lessons of past government failures. To advocate mission-driven policies may be useful, but the details of implementation need to be part of the advocacy. For example, a tough post-Brexit state aid policy will be important to safeguard “mission-driven” state investments from repeating old mistakes.
The other missing issue is accountability for outcomes. Complex problems require a lot of people and organisations to co-operate. The more
complex they are, the more co-operation is required. The UK’s centralised, micromanaging government structures have clearly been failing as the economy and society have grown more complicated. Command and control government might have functioned reasonably in the post-war world—but it certainly does not now. Devolution to the nations and now some English cities has shifted a few policy levers away from an unwilling centre, but has also left a mess of overlapping responsibilities with inadequate funding and powers. At the same time, Whitehall departmental silos are as keenly (and damagingly) defended as ever.
However, what the Westminster- and Whitehall-centric model still does have is clear political accountability: ministers are answerable to parliament as well as the media. For cross-cutting “missions” truly to get off the ground, such accountability must—somehow—be brought to bear across the traditional departmental responsibilities, and across different levels of government. Given the range of actors involved, who would be responsible for achieving a dementia-burden target by 2030, and which legislature would she have to answer to? Who could she require to act? Who would she have power to sack? Who would set the budgets? Leave the answers to these questions vague, and you discourage anyone from taking responsibility, and invite buck-passing and political evasion.
The challenges are fiendishly complicated, which is perhaps why catastrophists like Scheidel or Piketty focus on clarifying moments of conflict. Mission Economy argues for a more agile, flexible public sector, free to adapt to changing circumstances and new challenges. Mazzucato advocates institutional innovation and citizen engagement in the setting of missions and challenges. Who could disagree? But this kind of agility has most often been possible only in times of war, whether the Cold War producing DARPA and Nasa, or the famous “skunk works” of the Second World War, where a small group in Lockheed Martin was tasked with a risky project to develop a jet fighter outside the normal corporate structures of control. In the end, only victory legitimised those efforts—both the successes and, importantly, the failures.
Mazzucato offers a positive vision that many of us will find attractive. It is, after all, impossible to look at the landscape of the UK’s economy and society in early 2021 without concluding that significant change is essential. But how that will come about is another matter.
Mission Economy: A Moonshot Guide to Changing Capitalism by Mariana Mazzucato (Allen Lane, £20)
About the author
Professor Diane Coyle, Bennett Professor of Public Policy
Professor Coyle co-directs the Institute with Professor Kenny. She is heading research under the progress and productivity themes. Learn more